LLQP Segregated Funds & Annuities · Component 1.3 · 35% of the exam
A client whose spouse has never managed money asks what would happen if he died first. The need identified is:
- Simplicity and continuity of income for the survivor, through settlement options or a joint arrangement
- BNaming the children as beneficiaries, so they can manage the money on the survivor's behalf
- CAn estate freeze, so the portfolio's value is fixed at the date of the first death
- DA larger equity allocation, so the surviving spouse's portfolio can grow without active management
Correct answer: A) Simplicity and continuity of income for the survivor, through settlement options or a joint arrangement
A survivor who cannot or does not want to manage capital is best served by income that arrives without decisions, which is what settlement options and joint arrangements provide.
Why the other options are wrong
- BBypassing the survivor leaves them without the money they need.
- CAn estate freeze is a corporate tax technique, not an income solution.
- DMore equity increases the decisions and the risk the survivor must handle.
Exam tip
For a vulnerable survivor, income beats a lump sum.
Common mistake
Leaving a large lump sum to a survivor who cannot manage it.
What this tests
CISRO competency component 1.3 — Assess the client's needs and situation — which is weighted at 35% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 1
- The first step before recommending a segregated fund or annuity is to:
- A client's 'time horizon' for an investment is:
- 'Risk tolerance' in an investor profile refers to:
- A client says he wants 'high returns with no risk of losing money'. The agent should:
- Investment objectives are commonly classified as:
- Why is the client's marginal tax rate relevant to a segregated fund recommendation?
Practice the whole Segregated Funds & Annuities module
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